Stichting Ter Behartiging v. Schreiber
| Decision Date | 21 April 2003 |
| Docket Number | Docket No. 01-7811. |
| Citation | 327 F.3d 173 |
| Parties | STICHTING TER BEHARTIGING VAN DE BELANGEN VAN OUDAANDEELHOUDERS IN HET KAPITAAL VAN SAYBOLT INTERNATIONAL B.V. (Foundation of the Shareholders' Committee Representing the Former Shareholders of Saybolt International B.V.), Plaintiff-Appellant, v. Phillippe S.E. SCHREIBER and Walter, Conston, Alexander & Green, P.C., Defendants-Third-Party-Plaintiffs-Appellees, DWYER & COLLORA LLP, Third-Party-Defendant. |
| Court | U.S. Court of Appeals — Second Circuit |
Norris D. Wolff, Kleinberg, Kaplan, Wolff & Cohen, P.C. (Edward P. Grosz, Denise Rubin Glatter, on the brief), New York, NY, for Plaintiff-Appellant.
Daniel E. Reynolds, Lankler Siffert & Wohl LLP (John S. Siffert, on the brief), New York, NY, for Defendant-Third-Party-Plaintiff-Appellee Philippe S.E. Schreiber.
David N. Ellenhorn, Solomon, Zauderer, Ellenhorn, Frischer & Sharp (Margaret A. Dale, Caroline S. Press, on the brief), New York, NY, for Defendant-Third-Party-Plaintiff-Appellee Walter, Conston, Alexander & Green, P.C.
Before: MINER and SACK, Circuit Judges, and BERMAN, District Judge.*
The plaintiff, Stichting ter behartiging van de belangen van oudaandeelhouders in het kapitaal van Saybolt International B.V. (Foundation of the Shareholders' Committee Representing the Former Shareholders of Saybolt International B.V.), appeals from a decision of the United States District Court for the Southern District of New York (Jed S. Rakoff, Judge) granting the defendants' motion for summary judgment. See Stichting Ter behartiging Van de Belangen Van Oudaandeelhouders in Het Kapitaal Van Saybolt International B.V. v. Schreiber, 145 F.Supp.2d 356 (S.D.N.Y.2001) ("Stichting"). The plaintiff claims that the erroneous legal advice given by defendant Philippe E. Schreiber caused a United States-based corporation that was a subsidiary of a Dutch company to violate the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq. ("FCPA"). The corporation pleaded guilty in a Massachusetts federal district court to violating the FCPA, and its former chief executive officer ("CEO") was convicted of violating the FCPA by a New Jersey federal district court jury.
In the case at bar, the district court concluded that the guilty plea and the conviction collaterally estop the plaintiff, as the corporation's assignee, from claiming that Schreiber caused the corporation to think that its acts would not violate the FCPA. We disagree with the district court's conclusion that the corporation's guilty plea is inconsistent with the plaintiff's theory of how Schreiber misled the corporation. We also disagree with the district court's conclusion that the corporation was in privity with its former CEO at the time of his trial and therefore is bound by the trial's outcome. We vacate the judgment and remand for further proceedings consistent with this opinion. In so doing, we do not question the validity of either the plea or the conviction.
This appeal is from the district court's grant of the defendants' motion for summary judgment. The facts we adduce here are undisputed except as otherwise noted.
In 1995, Saybolt International was a private Dutch limited-liability company whose various worldwide subsidiaries were engaged in "the business of performing quantitative and qualitative testing of bulk commodities such as oil, gasoline, and other petrochemicals, as well as grains [and] vegetable oils." Am. Compl. ¶ 20. Saybolt International owned Saybolt North America, Inc., a Delaware corporation with principal offices in Parsippany, New Jersey.1 All directors and officers of Saybolt North America were also directors or officers of Saybolt International. One such person was David H. Mead, who served as chief executive officer of Saybolt North America and as an officer and director of Saybolt International. Mead also served as the de facto head of all operations under the control of Saybolt International in the Western Hemisphere.
Beginning in late 1994 or early 1995, Saybolt de Panama S.A. ("Saybolt de Panama"), a subsidiary of Saybolt International under Mead's supervision, sought to acquire property in Panama for the construction of a laboratory and office complex. Sometime in 1995, Mead was told that Saybolt de Panama had identified suitable property in the Panama Canal Zone but that the lease could be acquired only if the company would first pay a $50,000 bribe to a Panamanian government official.
Mead raised the issue of the bribe in a Saybolt North America board meeting held in New Jersey on November 9, 1995. Schreiber, a lawyer admitted to practice in New York State, was present at the meeting. In addition to serving as a director of Saybolt North America, Schreiber occasionally provided legal services to the corporation. At the meeting, Schreiber advised those present that Saybolt North America could not pay the proposed bribe to the Panamanian official without subjecting the corporation and its officers and directors to potential liability. Then and in the weeks that followed, however Schreiber allegedly led Mead and others to believe that "the bribe payment could legally be made under U.S. law by [their] Dutch affiliate," Saybolt International. Am. Compl. ¶ 13. Allegedly on this basis, on December 17, 1995, an employee of Saybolt North America traveled by commercial airline from New Jersey to Panama for purposes of arranging the bribe. On December 21, 1995, Saybolt International wired $50,000 from the Netherlands to a bank account controlled by Saybolt de Panama. The Saybolt North America employee then directed an employee of Saybolt de Panama to deliver the $50,000 to an individual acting as an intermediary for the Panamanian official.
On November 20, 1996, United States officials investigating possible environmental crimes by Saybolt North America executed a search warrant at its offices in New Jersey. The search uncovered evidence of the Panama bribe.
Shortly thereafter, on May 12, 1997, Core Laboratories, N.V. ("Core") purchased Saybolt International and its controlling interest in Saybolt North America. Pursuant to the purchase agreement, Saybolt International's former shareholders placed $6 million in escrow to cover any criminal liability that might arise from the company's activities in Panama. In exchange, Core assigned the former shareholders all causes of action for any legal malpractice related to the Panama incident.
United States prosecutors decided to bring separate criminal proceedings against Saybolt North America and its officers. Mead was arrested in January 1998, at which point he stopped actively working for the various Saybolt entities, which were by then part of Core. On April 20, 1998, a federal grand jury in the District of New Jersey returned an indictment charging Mead with, inter alia, violating the FCPA, 15 U.S.C. § 78dd-2(a)(3), and conspiring to violate the FCPA, 18 U.S.C. § 371.
At about that time, the United States Attorney for the District of Massachusetts and the United States Attorney for the District of New Jersey jointly issued an information charging Saybolt North America with substantially the same offenses charged in Mead's indictment: violating, and conspiring to violate, the FCPA. On August 18, 1998, officers of Core caused Saybolt North America to enter into a plea agreement in which Saybolt North America promised to "cooperate truthfully and completely with the United States ... in any trial or other proceedings arising out of this investigation of [Saybolt North America] and any of [its] present and former officers and employees." On December 3, 1998, Saybolt North America pleaded guilty to the charges in the information before the United States District Court for the District of Massachusetts (William G. Young, Judge). In the plea colloquy, the court instructed John D. Denson, the Core officer representing Saybolt North America, as follows:
You understand that before the corporation or corporations can be found guilty of [violating the FCPA], the government would have to prove beyond a reasonable doubt that an agent of the corporation, acting for the corporation and so situated with respect to the management of the corporation[] that the act or acts can properly be considered the acts of the corporation itself, has to have entered into a corrupt, that is, a bribe-like transaction in the international commerce of the United States. It has to be not just that there was a mistake, that this agent or agents of the corporations knew what they were doing.
Do you understand that?
Denson answered "Yes, sir." The court then entered judgment against the corporation.
Unlike his former employer, Mead decided to fight the charges against him. His case went to trial before the United States District Court for the District of New Jersey (Anne E. Thompson, Judge) in early October 1998. At trial, Mead presented evidence that, Mead contended, suggested that Schreiber led Mead to believe that "the bribe payment could legally be made," Am. Compl. ¶ 13, if the bribe of the Panamanian official were paid by a non-United States entity. The court instructed the jury that "[i]f the evidence shows you that the defendant actually believed that the transaction was legal, he cannot be convicted." Mead Trial Tr. at 6.131. The jury convicted Mead on both charges, and the district court sentenced him to four months' imprisonment and a $20,000 fine.
Saybolt International's former shareholders assigned their legal malpractice causes of action to the plaintiff, which brought this diversity action in the United States District Court for the Southern District of New York on November 18, 1999. In its amended complaint, the plaintiff alleged that Schreiber, and through him Walter, Conston, Alexander & Green, P.C., defendant-third-party-plaintiff, a law firm with which Schreiber...
To continue reading
Request your trial
-
U.S. v. Kay
...U.S. 135, 137, 114 S.Ct. 655, 126 L.Ed.2d 615 (1994). 55. Stichting Ter Behartiging Van de Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt Int'l B.V. v. Schreiber, 327 F.3d 173, 181 (2d Cir.2003) [hereinafter Stichting]. 56. Bryan, 524 U.S. at 193, 118 S.Ct. 57. Staples, 511 U.S.......
-
Krug v. County of Rennselaer, 1:04-CV-0640 (TJM/DRH).
...over the presentation" of proof in the prior proceeding) (quoting Stichting Ter Behartiging Van de Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt International B.V. v. Schreiber, 327 F.3d 173, 185 (2d Cir.2003)). Thus, while Bonnie Krug's claim appears exceedingly weak given the......
-
Hallinan v. Republic Bank & Trust Co.
...over the presentation on behalf of a party to that proceeding". Stichting Ter Behartiging Van de Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt B.V. v. Schreiber, 327 F.3d 173, 184-85 (2d Cir.2003) ("Stichting"). The Second Circuit recognizes "privity based on representation onl......
-
U.S. v. Kozeny
...36. 15 U.S.C. § 78dd-2(a). 37. Id. § 78dd-2(g)(2)(A). 38. Stichting Ter Behartiging Van de Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt International B.V. v. Schreiber, 327 F.3d 173, 183 (2d Cir.2003). 39. Id. 40. The Supreme Court has noted in other contexts that "the word `w......
-
Court Of Appeals Hands Down Landmark FCPA Ruling Defining The Term 'Instrumentality'
...738 (5th Cir. 2004); Stichting Ter Behartiging Van de Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt Int'l B.V. v. Schreiber, 327 F.3d 173 (2d Cir. 2003); United States v. Liebo, 923 F.2d 1308 (8th Cir. 1991); United States v. Castle, 925 F.2d 831 (5th Cir. 2 Case No. 11-15331 (......
-
FOREIGN CORRUPT PRACTICES ACT
...defendants “knew that [they were] doing something generally ‘unlawful’ at the time of [their] action”); see also Stichting v. Schreiber, 327 F.3d 173, 183 (2d Cir. 2003) (“[S]pecific intent to violate the FCPA is not an element of an FCPA violation.”). 132. 15 U.S.C. §§ 78dd-1(f)(2)(A) (fo......
-
Foreign corrupt practices act
...States, 524 U.S. 184, 191–92 (1998))). 136. See United States v. Kay, 513 F.3d 432, 449 (5th. Cir. 2007); see also Stichting v. Schreiber, 327 F.3d 173, 183 (2d Cir. 2003) (“[S]pecific intent to violate the FCPA is not an element of an FCPA violation.”). 137. 15 U.S.C. §§ 78dd-1(f)(2)(A) (......
-
Foreign Corrupt Practices Act
...defendants “knew that [they were] doing something generally ‘unlawful’ at the time of [their] action”); see also Stichting v. Schreiber, 327 F.3d 173, 183 (2d Cir. 2003) (“[S]pecific intent to violate the FCPA is not an element of an FCPA violation.”). 131. 15 U.S.C. §§ 78dd-1(f)(2)(A) (fo......
-
Patching the Holes in Sox: Fcpa Disgorgement After Liu and the Ndaa
...stated an act is done "corruptly" if it is "done voluntarily and intentionally" were appropriate); Stichting Ter Behartiging v. Schreiber, 327 F.3d 173, 183 (2d Cir. 2003); United States v. Liebo, 923 F.2d 1308, 1312 (8th Cir. 1991).360. 15 U.S.C. § 78u(d)(8)(A)(ii)(IV).361. Id. § 78dd-1(a)......